The Power Of The 21st Century Real Estate Investor: No Longer Hostage To Geography
by Tom on January 12, 2009
in Realtor Thoughts
This is another guest post from my friend Jeff Brown from San Diego. Had breakfast with Jeff the other day. A great guy and someone with a very solid sense of what’s important in real estate. I hope you’ll take the time to read this…..
Besides the real estate investment myths that have survived for decades, maybe the most costly carryover is this one: “Gotta stay local. Must be able to drive by my properties or the world will stop spinning, the sun won’t rise in the east, and McDonalds will stop sellin’ hamburgers.”
Really?
So many ‘age old truisms’ have fallen by the wayside in the 39 years since I started doin’ this. Exchanges are now ‘delayed’ instead of having to close simultaneously. Yeah, you heard right, simultaneously. You think identifying your uplegs in a tax deferred exchange bring with it a little pressure? Gimme a break. Try closing three properties being traded into seven properties — and all the lenders, title companies, ad nauseam have to cooperate so that all 10 properties close on the same morning. Sometimes I look back at those ‘cowboy’ days and wonder why more investment brokers didn’t just drop dead in the last days of an exchange. 
But I digress.
Along with all the white noise driving us nutso, the information/communication age in which we live has also made buying real estate hundreds or thousands of miles away a real option. When I woke up one day back in the last months of 2003, knowing San Diego income property was no longer viable, I removed Brown and Brown’s San Diego borders. No longer would we or our clients be shackled by the artificial limitations of geographic location.
An example in real life.
Here’s the Reader’s Digest version of a couple who decided awhile back to Get Outa Dodge and get serious about their retirement.
Their ‘Dodge’ wasn’t San Diego, but very similar. The numbers simply made no sense anymore. They listed their rental home and triplex for sale. When they sold we came in and turned the sales into exchanges. When they closed we already had six properties waiting for contracts. About 40 days later those properties closed and their exchange was complete.
They signed all documents from beginning to end either in their own kitchen, or the escrow company. They received full inspections with any work needed done to their satisfaction. Property management came in at the end just before closing and captained a smooth transition. All loan docs were signed in their own home, at their convenience. The tax deferred exchange was handled by us while using an Accommodator in San Diego. How well do we know this company you ask? Well, I know the owner. My dad did business with his dad beginning around 1964. Now we do business with each other. That’s how well. Over 40 years of earned trust and demonstrated confidence.
I did business with them before delayed exchanges existed, or were even a gleam in the Starker family eyes. Who’s Starker? That’s a long story, but suffice to say they’re the reason we don’t hafta close exchanges simultaneously anymore. God bless them.
A multi-property, multi-state exchange managed by our firm in San Diego. Their properties were in a different state. The properties into which they traded were in yet another state — as was the lender. Their new real estate attorney (referred by guess who) resides in still another state.
Sensing a trend here?
Wherever you or your properties are, in today’s vastly reduced world, just isn’t relevant. What’s relevant?
The boundaries holding real estate investors hostage to their local market exist only in their minds. When regular folks can successfully do all these things, and without leaving town once — if that’s their preference — then all the roadblocks are only imagined.
Most local real estate markets around the country are not candidates for investment. You may correctly infer from that statement there are local markets proven to be not only attractive now — but also show all the signs of being fundamentally sound economically for a long time. We used to call places like that San Diego. Alas, times change. Those who recognize these changes and act accordingly will prosper. Those who don’t will no doubt realize years later, they were victims of Stockholm Syndrome, the real estate version. Bonding with the market that’s held you hostage ain’t the way to the retirement for which you’ve planned and worked so hard.
‘Local’ today is anywhere we want it to be. Anywhere it makes sense to be. Anywhere that will significantly advance your journey to retirement — or speed up that trip. Hey, now there’s a thought. Ponder that. But not too long, OK?
Tic Tock.
Use your local computer to get ‘puter’s attention. We’ll end up in a real life conversation about what local real estate market might be best for you. Meanwhile, browse through some of the podcasts and see if they don’t speak to your circumstances or what you’ve thought all along. Have a good one.
